US foreign trade zones and import intensity examining determinants of import intensity in US foreign trade zones

Abstract

Purpose

The paper aims to investigate the effects of several determinants of firm import intensity in US foreign trade zones (FTZs). Even though the major objective for the establishment of US FTZs is to encourage exports by facilitating the duty-free entry of imports, US firms have used it as a gateway to import goods into the US market. Currently, over 90 per cent of US FTZ output is consumed in the USA. The author examines the major determinants for such import intensity in US FTZs.

Design/methodology/approach

The study is based on a survey that was conducted to explore the factors that influence import intensity of firms operating in US FTZs.

Findings

The findings reveal that besides export orientation of firms, the most promising predictors of import intensity of firms operating in USA FTZs are the policy environment in the form of inverted tariff benefits and firm business strategy.

Practical implications

The findings are important for managers presently operating in US FTZs or intend to do so in future.

Originality/value

Even though there are numerous studies on free trade zones and exports, this is the first study to examine the import intensity of US FTZs and their determinants.

Citation

Seyoum, B. (2017), "US foreign trade zones and import intensity examining determinants of import intensity in US foreign trade zones", European Business Review, Vol. 29 No. 1, pp. 103-122. https://doi.org/10.1108/EBR-06-2016-0072